Saturday, July 23, 2011

Power is like a liquid, sometimes erupting under pressure to cover all around it, sometimes seeping through cracks to find its own levels. The Italian President has no volcanic properties but when there is a vacuum he can and does fill it.
There has been much talk over the last ten days about Giorgio Napolitano increasing the role and importance of the president. Some say that he is overstepping his constitutional powers, others are grateful for a steady hand in the present storm. Either way, he has been much in evidence.
The recent austerity budget had a rough ride to Parliament; Tremonti wanted it tougher, Berlusconi and most of the cabinet wanted it much softer and threatened to fire Tremonti. The European Commission and the markets wanted some sign of life in Palazzo Chigi. It was at this point apparently, that Napolitano intervened first to make sure that the bill would make it through the cabinet into Parliament and then to ensure that the opposition would not obstruct it wheb it arrived. The result was the fastest budget in history – it was maybe too little, too late; on Monday the response was underwhelming, but since then the markets at least have stabilised. But whatever the mediumterm results, it was a smart piece of manoevering by the Quirinale. Nowhere in the constitution does it give the President budget powers but for a few days at least, he had taken over from the prime minister who was absent both physically and politically throughout.
Then in the middle of the week, he again took the political initiative when he gave the magistrature a severe rap on the knuckles. He told a group of newly appointed magistrates “to avoid conduct which creates undue confusion between roles and encourages the existing intolerable and sterile clash between politics and the magistrature”. For someone who is supposed to be a largely symbolic leader and head of the judiciary, these are strong words.
First of all condotta is stronger and more negatively marked than “conduct” and much more so than “behaviour”. Not so long ago, Italian schoolchildren were marked on “conduct” and there is a whiff of schoolmasterly disapproval behind the word. The phrase also presumes that magistrates are overstepping their roles and moving directly into politics and accepts that there is indeed a clash between “politics” and the judiciary. It is a “when did you stop beating you wife?” statement.
It also takes for granted that “politics” is something apart from the law and the judiciary. At least since Craxi in the Eighties, elected politicians have tried to argue that they are somehow apart from the rest of society with privileges and immunities due. When one of them has been investigated for alleged wrongdoing, they close ranks and defend “politics”. Berlusconi of course has taken this to paroxistic levels but even a magistrate and former speaker of the chamber, Luciano Violante has made the distinction between “legality” and “politics”, a point he repeated last week.
The President is the titular head of the judiciary; the not-so-veiled subtext of his speech was that prosecutors and judges should pull their punches in order to keep the country going. If they continue with their investigations, arrest warrants for parliamentarians, telephone taps, Napolitano implied, then there might be another corruption scandal as in 1992 and in the present economic climate, Italy cannot afford it. Even less than mediating the passage of the budget, the constitution certainly does not give the President the power to instruct judges and prosecutors not to apply the law.
It was a remarkable speech because any investor listening could only presume that there is more rot to be uncovered by investigaters and more institutional instability just below the surface making Italy even more unreliable than it looks.
The more partisan interpretation is that Napolitano was trying to defend his former party comrades some of whom are under investigation. This is unfair as, unfortunately Napolitano has long separated “moral questions” from political ones.
In any case, the following day after widespread criticism, he argued that he had just recommended magistrates not to do anything that might weaken their efforts to guarantee legality especially when dealing with politicians.
Normally Italian presidents, Napolitano included, sail high – well above the day to day scrummage of party politics. They open public works and talk about progress or go to schools and extoll the benefits of education. The only political negotiation that they are involved in is the formation of a new government but they are normally behind closed doors.
This time Napolitano has come out into the open, first to see the budget through Parliament and then to try and damp down the growing public insufferance for the whole political class. It is true that power fills vacuums and that there is a dire lack of leadership in Italy today, but if the decisionmaker of last resort becomes involved in day to day politics, he is likely to lose his prestige without even resolving the issues. And that would leave Italy even more dangerously uncovered and vulnerable to a more violent type of power.

Tuesday, July 19, 2011

There’s talk of David Cameron having to step down and of course the chorus of calls for Silvio Berlusconi to resign is rising. So a little comparison of the two systems might be interesting.
Both countries have prime ministerial systems – that means that the head of government stays in power for as long as he or she has the confidence of Parliament. If they lose that confidence, either in an explicit vote or because they lose the support of their party or their coalition, then they will normally give their resignation to Queen or President. The latter then follows a clear procedure to find a successor which sometimes takes a few days but has on occasions taken months. The former normally has a pre-chosen successor ready in waiting.
The Italian method is well tried and pretty straightforward, only as with many things in this country, it can take some time.
Despite the plethora of no confidence votes recently and despite the 57 governments since Italy became a republic, almost none of them fell after a vote. Normally, internal opposition made it known to the serving prime minister that he no longer had the support of the House (it was normally the Chamber of Deputies). He would then offer his resignation to the President who would follow the Constitution, consult with party leaders and former presidents, try and find a likely candidate to take over and give him a mandate to form a government. The negotiations sometimes took months. In the so-called First Republic, this process was even used after general elections. Since then, from 1994, the candidate for prime minister has been explicit but even then, sometimes it has taken time to form a government.
Today, there is a contradiction between the prime minister who was listed as the leader of a coalition (and therefore is in a sense an “elected” prime minister, or at least someone with a personal popular mandate) and the constitution which still gives supremacy to parliament. So Berlusconi argues that he is “anointed by the people” and that if he loses support (as he did in 1994), there should be new elections (which did not happen then). So if and when he goes, especially if it is soon, he will certainly demand new elections and almost certainly he will not get them. The most likely scenario is that Napolitano will follow the constitution, consult party leaders and, most likely, find a suitable non-party “technician” to lead a government of national unity. Alternatively, in theory at least, there could be a new centre-right leader with the same majority but somehow that does not seem likely.
In Britain, without a codified constitution, everything is much more flexible. Since World War II, six serving prime ministers have stood down: Churchill (1955), Eden (1957), Macmillan (1963), Wilson (1976), Thatcher (1990), Blair (2007). The first three were Tories who at the time had an informal consensus system of choosing leaders – the party grandees decided who was the best chap to run the show and he became leader. If they were in power, then he became prime minister. Any backbiting or infighting was kept well behind closed doors. Wilson was succeeded by James Callaghan in a vote by Labour MPs. Thatcher was ousted by her own party most of whom felt by 1989 that she was a liablity to their chances of winning the next election. It was a bitter and difficult series of campaigns in which Thatcher felt she had been betrayed by her party and said so very openly. Again as with the Labour party, it was the MPs who elected John Major as her successor and PM. Gordon Brown was elected leader of the Labour Party to replace Blair in what was in practice a non-contested election.
In all these cases, the party in power had a clear majority in the Commons so the leadership and the premiership went together. This is not the case today.
Today, if Cameron were to resign, the Conservatives would have to elect a new leader but he or she would not automatically become PM. For the first time since the war, Britain has a coalition and just as we were in uncharted waters last year when there was no majority, so there are no precedents today.
There have been some suggestions that “Nick Clegg must lead” and create a new Lib-Lab coalition with Ed Milliband’s Labour Party. That is a possibility but at the moment, not a very likely one. Another is that Clegg could take over the existing coalition but I can’t see many Tories accepting that. Or they could follow previous precedents which would mean a new Conservative leader taking over the party and Downing Street.
It will be new, it might be messy but paradoxically, despite the uncertainties, it will definitely be quicker and cleaner than the Italian succession whenever that takes place.
I’ll come back to the questions of the Italian succession very soon as it is a pressing problem.

For those of us not versed in the dark arts of accounting or international finance, there is little more solid than money; I have it or I don’t, I can borrow it or lend it and measure it down to the last penny. But confidence is an altogether different commodity, far more abstract and difficult to gauge. This week, Italy is having to persuade us that the world should have confidence in the country.
This week Italy is trying to persuade us that the world should have confidence in both its political and financial stability. It will not be easy.
One index are the ratings agencies evaluation of a country’s creditworthiness and another is the divide beween Germany’s interest rates and the other eurozone rates. On both scores, confidence in Italy is declining day by day.
Until recently, Italy had avoided the worst of the world and European crises. There was no housing bubble as Italian banks demand copperbottomed collateral before they will lend the ordinary housebuyer a cent. There were almost no toxic assets as Italian banks are amazingly conservative in their investment policies. Once upon a time few Italian bankers spoke a word of English; today most of them speak the words and grammar but to their credit they don’t speak the language of the City or Wall Street or the innovative financial operators who filled the market with dubious products over the last decade.
Despite a declining economy, Italians still save and private saving is among the highest in Europe. It’s debt is the second highest in Europe at 120% but its budget deficit is not outrageous and is close to balanced when interest payments are taken out. Italy seemed condemned to a slow and fairly dignified relative decline, a bit like Venice in the 19th century.
But the workings of the financial markets are not slow and Berlusconi and his government are anything but dignified so Italy’s fate is rather different.
The problem is leadership. Silvio Berlusconi won elections not just because he owns half the country’s television stations (though that helps) but because he projects optimism. He has always been very careful not to deliver bad news himself and is highly critical of anyone in the opposition who suggests that all is not well economically. But for the last year, it has been a hard act to keep up; it is not because he is accused of having sex with under age prostitutes nor even that he is on trial for having set up slush funds or for paying English lawyer David Mills to perjure himself or for paying a judge to award him Italy’s biggest publisher in a takeover case. In any case his supporters either don’t believe the accusations or they don’t care even if they’re true.
His optimism falls flat because there are too many Italians underpaid, unemployed of underemployed; too many companies are either struggling or have already given up the ghost. In Italy, he is no longer credible and abroad, the EU, the ECB and the ratings agencies look at Italy’s debt and wonder where it will end.
Enter Giulio Tremonti. The economics minister has rarely been off centre stage, actually, but now he spends more time there than Berlusconi. He arrived, like a good portion of Berlusconi’s ministers and parliamentarians as a business associate, his principal accountant. But unlike the other ex-employees, Tremonti has never been a yes-man and has earned a reputation for solid if not hugely innovative policy. He left the cabinet over policy differences in the last Berlusconi government and for most of this legislature, he has been closer to Berlusconi’s coalition partner Umberto Bossi and has been making thinly veiled moves towards succession.
Over the last year, Tremonti has repeated that Italy needs to reduce its debt and that a major austerity package was inevitable. Berlusconi in contrast has been trying to deal with decling approval ratings and an increasingly divided coalition, quite apart from his court cases. Obviously he is less than enthusiastic about an austerity budget. He has to manoevre between the EU rock and the Tremonti hard place. He knows that if he fired Tremonti, internationl wrath would follow. Last month, Berlusconi said pointedly that cabinet decisions were collective and Tremonti could not dictate a budget and last week he accused Tremonti of “not being a team player”.
Tremonti himself does his best to make himself unpopular, calling a cabinet colleague “a cretin” in a stage whisper in front of an open mike during a press conference. He is alone in the government but has some support from business and the Church. If he was forced to resign, then he would be in a good position to put himself forward as an economically safe alternative to Berlusconi. His only problem at the moment, is the criminal investigation into one of his close staff at the ministry who was also hosting his boss in an €8,500 per month flat.
Beyond the personal and policy differences between the two men, there are big divisions between Berlusconi’s People of Freedom and Umberto Bossi’s Northern League. Berlusconi knows that he must reduce the deficit, Bossi is just concerned about how to stop the hæmorrage of votes and knows that austerity does not win elections.
This week parliament starts debating Tremonti’s €47 bn budget. It should have calmed markets but in the discussions, the main issues were lost. It is a fudged budget – first of all, most of the cuts will affect the next government: €2 bn this year, €5 bn in 2012, and €20 bn each in 2013 and 2014 – with elections due in April 2013 at the latest. Secondly, most of the cuts are regressive – higher health service charges, fixed, whatever your income; cuts on medium range pensions, and cuts on payments to local and regional authorities who provide much of Italy’s social security and health service.
There is no certainty that even these cuts will be implemented. There is the likelihood of government amendments “to improve the bill” said one spokesman, reducing the pain – Tremonti has said that anything is possible but overall savings must stay the same. There is even the possibility of re-introducing a clause which would save Berlusconi’s Fininvest company €570m. The figure was awarded to Carlo De Benedetti as civil damages. In 1991 Berlusconi’s lawyers had bribed a judge to give him rather than De Benedetti the country’s biggest publisher, Mondadori. The criminal case against Berlusconi was dropped because of the statute of limitations but others were convicted. The civil case recognises Berlusconi as responsible.
The original draft budget had a clause which would have delayed payment until the third and final level of judgement. It was yet another blatant example of Berlusconi’s conflict of interests and was removed after an outcry and the preventive interventation of the President of the Republic. Now there are suggestions that it might be re-introduced. Neither Moody’s nor the ECB, nor, one presumes Chancellor Merkel who called Berlusconi on Monday 11th July had this in mind when they pressed for an austerity budget.
So there are many obstacles before even this budget passes and if it is not implemented, then the confidence problem remains.
If the budget passes more or less in its present form, on the other hand, then confidence will remain fragile but intact. If Tremonti is forced to go, if the Northern League decides they are better off in opposition, if parliamentarians worried about having to face an electorate, reduce the cuts, then that confidence will break and the future would be very bleak for Italy and for Europe too.
However bad the Greek crisis is, the Greek economy is tiny. Italy is the third biggest economy in the eurozone with a massive debt that it has difficulty servicing. The only answer would be radical changes in the economy and in order to do that, there would have to be radical changes in politics, not just in the present leadership, that goes without saying, but in most of the discredited political class.
Every generation since the beginning of the 20th century, Italy has reinvented its politics, usually under pressure from outside forces, the world wars, 1968 and the end of the cold war. The time is ripe for change and the financial crisis might just be the stimulus Italy needs.

This was published in The Daily Telegraph on 12 July.
A week later, after the austerity budget has become law - it was rushed through Parliament on Thursday and Friday and President Napolitano signed it into law on Friday evening; already Italians are paying more for their health service - things look even worse. The markets have so far not shown confidence in Italy and the discontent at the perks and privileges of the political class are growing

Sunday, July 17, 2011

Governments and financial markets are run by hardheaded men and a few women who deal with facts, like Mr. Gradgrind… they evaluate the data and don’t let emotions get in the way of their pursuit of power and profit, right? Well, no, not exactly. The markets yo-yo at every half-truth and successful politicians must control the image before the facts. Rumor is a much better metre than Gradgrind’s “facts”: I, from the orient to the drooping west, Making the wind my post-horse, still unfold The acts commenced on this ball of earth. Upon my tongues continual slanders ride, The which in every language I pronounce, Stuffing the ears of men with false reports.

And if some of them are true, no matter, they will give credence to the false ones. Still, Shakespeare’s references to reports in many languages flying from east to west on the wind ring true today.

Italy’s crisis is nowhere near as dramatic as Henry VI’s nor as bloody but like the Wars of the Roses, it has some striking actors. Like Rumor, Italy’s crisis is fuelled by reports in Greek, in Portuguese and Spanish, and in English. Italy’s Gradgrind “facts” are bad, but hardly worse today than they were a year or two or three ago. Italy’s ability to repay its debts is no less either. But if everyone, the markets, think that it is weaker, then it is. And if the government is unable to lead, then the crisis becomes real. Here the rivalry between the Prime Minister and the Economy Minister is crucial, a rivaly which is personal and policy-driven.

Center stage at the moment, and enjoying every minute, is Giulio Tremonti, Minister of the Economy and Finance and this week at least, savior of the Italian economy and possibly the euro too. There has been almost a year of grumbling in the center-right coalition. Tremonti has been calling for spending cuts and prime minister Silvio Berlusconi and the rest of the government wanting to spend their way back into better approval ratings.

On Thursday, he presented his budget to the Senate. The Prime Minister’s seat next to his was conspicuously empty and Tremonti was happy in the limelight with a speech full of his trademark sarcasm and I’m-cleverer-than-you remarks ending with the warning that “if we don’t act now, then we will be like the Titanic and even the first class passengers suffered”. Curiously he pronounced the word “titanich” as if it were Yugoslav partisan. Maybe he needs that kind of ruthlessness. In any case the simile was apt as many more first class passengers survived than second class or steerage and his budget hits the middle and poorer classes heavily. Corriere della Sera, hardly a diehard anti-Berlusconi rag, reckoned that families would be paying €1,000 more in the coming year.

Health service charges have gone up, tax deductions are down. Government payments to cities and regions (the equivalent of US states) are cut which means that their social services will be reduced or local taxes will be increased. Taxes on fuel prices went up 6 cents a litre last week with gasoline at €1.60 per litre and diesel at €1.50.

But there was no obstruction from the opposition; the bill passed without debate in both houses with each party just declaring how they would vote and why. The opposition found itself in a corner; if they had tried to stop the measure, then the speculators would have continued, the spread between Italian and German government bonds would have continued to widen and the crisis would have moved into catastrophe mode. And the opposition would have been blamed. Instead, they accepted President Napolitano’s council and allowed the budget through in two days.

Tremonti recognised their support in what was a genuine expression of gratitude. He concluded, though, in his more normal supercillious vein with a clear stab at Berlusconi. He quoted Livy “Hic manebimus optime” literally translated as “we will stay here very nicely”. Actually, he was saying “don’t think you can fire me because I have the support of President Napolitano and if you try, then the rating agencies, the ECB, EU and above the speculators will shaft Italy”. It was another salvo in the longrunning war between Berlusconi and Tremonti.

A month ago, Tremonti put forward his plans for a serious austerity budget only to have Berlusconi tell the world that “Tremonti does not run the show. Cabinet decisions are taken collectively”. The proposal that appeared last week was a pale copy of the original; €47 bn saving but only €2 this year and €5bn next. €20 bn for 2013 after the elections and another €20bn in 2014. It also included a clause which would have delayed payments of damages in civil cases; happen that a verdict was expected in which the defendant was Berlusconi’s Fininvest. This was blatantly pro-Berlusconi measure and Tremonti denied any hand it it. In any case Napolitano made his disapproval very clear and the clause was removed. But to make Berlusconi pique even more explicit, he gave an interview in which he said that Tremonti was not “a team player”

Tremonti is not only under attack from his boss. One of his close advisors in the Ministry, Marco Milanese is under investigation for corruption. He is alleged to have taken payments in return for positions and contracts from the ministry as well as having a highly extravagant lifestyle. He apparently turned down the offer of an Aston Martin because it was “second hand” and took a Ferrari instead. He relived a film about “Christmas in New York”, same hotel and same film stars (Cristian De Sica and Sabrina Ferrilli). Worst of all for Tremonti, he paid €8,500 a month for the appartment that Tremonti occupied for the last year, echoing another Berlusconi minister who was forced to resign when it was discovered that his house was paid for by someone else “without the minister’s knowledge”.

Milanese is also alleged to have been carrying out Tremonti’s duties without any official delegation of authority and to have been rather too close to the minister. The mudslinging has not begun yet.

On the prime minister’s side there is plenty of mud which has already been slung and plenty more waiting in his various trials but apart from the personal scandals, he is politically weaker than ever. Local elections and referendums in May dealt him serious blows and his approval ratings are below 25%. This last week he made no public appearances, avoided the Senate debate and arrived late for the Chamber vote without speaking. The hero of the hour is Napolitano. The Italian president is a largely symbolic figure like Queen Elizabeth but he has residual authority which he uses when the normal executive is lacking. It was his mediation which took the budget through Parliament and Berlusconi felt left out (and was).

He has also never liked giving bad news and he also feels that Tremonti’s success is somehow his failure. And then the civil damages verdict which he was so afraid of was published awarding another rival €560m, a hefty sum even for Finivest. It was not a good week for Berlusconi.

Paradoxically, the weakness of the two men means that neither can trump the other, at least in the short term. If they tried, then the sharks from the financial markets would rush in the results would be disasterous not just for Italy but the whole of Europe. So for the moment, they are the odd couple who have to put up with each other though the clouds on the horizon are not far away.

The budget had no immediate measure to cut the costs of politics. Italian parliamentarians are the highest paid in Europe and they have very generous pensions afterwards. On Monday, Italians will be paying more for their health service and pension increases will be stopped for many and yet cuts in deputies’ perks will only take effect after the next elections.

Italians’ unhappiness about politicians’ greed is growing; it hasn’t reached the point of violence as we’ve seen in Greece but as the cuts begin to be felt, there is bound to be some reaction.

There is the drama of the big players in Italy which makes for good theatre but the country’s discontent is very real and needs no Rumor to propagate it.

Tuesday, July 05, 2011

As I wrote on Sunday, the final text of the budget bill had not been sent to President Napolitano so we didn’t know some of the details.
Yesterday the bill was finally published and the reason for Tremonti’s modesty was made clear. Once again and in a blatantly gross way, Berlusconi is using the government to protect his personal interests.
Hidden in the folds of the bill are a couple of apparently innocuous additions to the Civil Code. On page 105 (out of 117), Art. 37, clause 22, subsection b suspends payment of damages in civil cases after the appeal judgement when the sum is more than €20m. It just happens that in a few days time, there will be the verdict in the civil action between Carlo De Benedetti and Berlusconi. In the court of first instance, the judge awarded De Benedetti €750m. The appeal judgement is expected to reduce this to around €500m. The sneak clause, if passed would suspend payment of damages until the third and last level of appeal (which only deals with questions of law); it would save Berlusconi half a billion euros for a few years at least.
However deeply buried, the clause has not stayed hidden for long. The storm broke this morning with ministers falling over themselves to say they knew nothing about the clause. Starting with Tremonti himself who apparently knew nothing about it; he cancelled a press conference this morning allegedly because of a thunderstorm but no one believes that. Berlusconi’s lawyer, Niccolò Ghedini has said he did not write it and foreign minister Frattini who often acts as Berlusconi’s spokesmen has also denied knowledge.
The Northern League ministers have also said they knew nothing about the clause.
Senior magistrates have suggested that the clause might well be unconstitutional
Even moderate Catholic papers like the bishops’ Avvenire have condemned the move (along with the more leftwing Famiglia Cristiana).
The bone of contention is that after Berlusconi’s Fininvest paid judges in order to allow them to take over De Benedetti’s Mondadori (Italy’s biggest publisher) 20 years ago and after criminal convictions, De Benedetti sought damages and won. The civil case is the result of crimes which have already been dealt with.
Unless the government withdraws the bill, the next move has to be Napolitano’s, a hot potato that he presumably would rather not have on his desk.
The episode shows an arrogance which is exceptional even for one not known for his modesty. Either he thinks that he can hoodwink ministers, allies and the rest of Italy or he is so desperate that he doesn’t care. Either way, it’s not a pretty picture.

Sunday, July 03, 2011

Mel Brooks’ 2000 year old man explained it perfectly “Robin stole from everyone and kept everything”. It was Marty, the press agent who put out the story “he took from the rich and gave to the poor” to all the papers. “Who knew? He give you such a knock on the head that you wouldn’t remember anything anyway”.
Economics minister Giulio Tremonti is trying to emulate that version, but he doesn’t have Marty and he has not been able to knock us out before the act.
When he presented his budget to Cabinet on Thursday, the detailed measures were shrouded in mystery, or rather, they were simply fudged. First of all, €40bn of the €47 bn plan will have to be carried out by the next government in 2013 and 2014. And then it was not clear where the €20 bn p.a. cuts were going to come from.
Now we have a better picture. Pensions between €1,428 and €2,380 gross (per month) will only have 45% of their cost-of-living increase. Above €2,380, there will be no increase at all. With a large and rapidly increasing older population, these cuts hit former wage earners (tendentially centre-left) more than self-employed (tendentially centre-right) but they will affect all social classes and voters enough to worry both the Northern League and the People of Freedom.
Another massive part of the budget comes from increased health service charges. At the moment they are talking of €10 extra for tests and specialist consultation and €25 for emergency services, not so much for Americans but a lot for Italians, especially poorer ones. According to a Rome University of Tor Vergata study,it would mean €10 bn cuts to health service translating into €500 extra per family per year .
Other estimates are equally dire. One study suggested the budget would cost everyone €741 this year; another that spending power would be reduced by €927 per family.
Local authorities are due to lose €9.3 bn cuts which will mean higher local taxes. And the proposal allows the government to gradually increase VAT over the next four years .
Outside the budget is an extra 6 cents on petrol and diesel supposedly to go to culture and to cover “extra” costs of immigration. According to a consumer group, this will cost everyone an extra €488 just this year.
So much for “stealing from everyone”. But he, or they, all the Merrie Men, keep it all for themselves. There is none of the “we’re all in this together”; on the contrary, most politicians think they earn their salaries and their generours perks.
Raising taxes at the moment is hardly unique to Italy but the increasing awareness of the excesses of the political class (known as the Caste after the 2007 bestseller La Casta) makes increased taxes doubly unacceptable. Wages and subsidies to national politicians will be reduced (tho’ one League politician had the nerve to say that municipal representatives were underpaid) but only after the next elections. Large official cars will also be abolished (with a limit of 1600 cc for all except the top people) but only when the present cars are ready to be written off. Not surprisingly, critical media delight in showing David Cameron on his bike followed by footage of an ordinary Italian minister in his large bullet-proofed car followed by a motorcade.
Italian members of parliament are the highest paid in Europe and the best that Tremonti can do is to propose a committee to discuss how to bring salaries into line with the bigger European countries. In contrast to pension reductions for the rest of the country, he has said that for politicians, “rights which have been acquired” cannot be removed. It is clear that for the moment, Berlusconi considers his followers’ loyalty much more important than his electoral support in the country. But many of those followers, especially in the League are already worrying about being re-elected so they will have to give the voters something and it’ll have to be more than Robin Hood’s press agent Marty.
In any case, we still do not have a clear picture even of what the government would like the budget to be – so much so that President Napolitano issued a communiqué today pointing out that he still has not received the bill. As ever, when there is uncertainty, speculators dive in and the ratings agencies worry. They still maintain that there is a 1 in 3 chance of lowering Italy’s ratings over the next two years.
I will try and deal with the costs of politics this week, if the rubbish in Naples and anti-high speed train wars in Piedmont don’t take over.